Category Archives: Credit

Having and using credit is convenient but it usually costs something and it needs to be paid back. It is important to understand the costs of different forms of credit. Some forms of credit may be easier to obtain than others, but they often come with a high cost.

If you are thinking about borrowing money or opening a credit account, your first step should be to figure out how much it will cost you and whether you can afford it. Then you should shop for the best terms. When applying for credit, there are three main terms you need to be familiar with:

Principal –The amount of money you are borrowing.

Interest Rate – What the lender charges you to allow you to use their money. It is a percentage of the principal (charged per year, month, or week.)

Fees– Cover the lender’s costs to review your credit application or to service your account (These can be maintenance fees, service charges, late fees.)

Because it costs money to use credit, in general, credit should be used for things that have a useful life beyond when you finish paying your debt, like a home purchase.

Example:

Ana and Tom Velasquez recently got their credit fixed and bought their first house from Rapid Home Solutions! They are throwing a huge house-warming party and watching the biggest boxing match in years.

Tom really wants to buy new flat screen TV to watch the fight on. But, it will cost him a good $500. After talking about it, Tom promises Ana that he would do some digging and find the best possible deal for them. He researched the following four options.

Best Choice:

Tom and Ana decide to borrow a TV from Tom’s brother for the night of the party and to save money each month so they can pay cash for a new, much bigger TV in a few months… and have extra money left over for a surround sound speaker system too, all while remaining debt-free!

Now, Tom was thinking smart here. He made a responsible decision – saving money while keeping himself and his family out of unnecessary debt.

Cost of New TV: $500.00

Payday Lenders

$ 4,425

Total Owed by Tom

If Tom gets a $500 loan at a payday lender with a biweekly interest rate of 20%, he would pay $100.07 every two weeks for 21 months for a total cost of $4,425.01.

Addition cost for Tom is: $3,925.01

Rent-to-Own

$ 1,109

Total Owed by Tom

Tom would pay $13.99 per week for 18 months for a stereo from a Rent-to-Own store, costing a total of $1,109.22..

Addition cost for Tom is: $609.22

Credit Card

$ 812

Total Owed by Tom

Tom could use a credit card to purchase the stereo. If the card interest rate was 24% and he only paid the minimum payments, the TV, plus interest would cost $812.71.

Addition cost for Tom is: $312.71

CashBEST OPTION FOR TOM

$ 500

Total Owed by Tom

If Tom waits to buy the TV until he is able to save money to pay cash, it will only cost him $500...

Addition cost for Tom is: $0

Make sure the information in your credit report is correct.

This is extremely important to deciding whether or not you qualify for a loan from a lender. The decision is based in large part on the information in your credit report.

However, credit reports may often contain errors. If you find an error in your credit report, have no fear. Just follow the process below:

Send the credit reporting agency a letter stating information you think is inaccurate. Include copies (not originals) of documents that support your position and prove your identity. In addition to providing your complete name and address, your letter should clearly identify each incorrect item in the report, state the facts and explain why you dispute the information, and request deletion or correction.

Credit reporting agencies must investigate the information within 30 days.

If the investigation shows that the information is inaccurate, all three credit reporting agencies must correct the information in your credit report.

When the investigation is complete, the credit reporting agency must give you the written results and a free copy of your report if the dispute results in a change.

If an investigation doesn’t find an error, but you still believe your credit report is inaccurate, you can contact the creditor directly and try to resolve the problem.

You also have a right to explain your side of the story on the credit report if the issue remains unresolved. You may write up to 100 words to explain the situation. If you were a victim of identity theft it is your responsibility to update/correct the information on your credit report. Click here for detailed information on identity theft.

Identity Theft (definition): When someone uses your name or personal information, such as your Social Security number, driver’s license number, credit card information, or other account information without your permission.

Identity thieves frequently:

Open new accounts in a victim’s name

Apply for new credit cards using the victim’s information, make charges, and leave the bills unpaid

Set up telephone or utility service in a victim’s name

Apply for loans, apartments, and mortgages in a victim’s name

Identity theft can result in damage to your credit rating – damage that could take years to fix. Generally, victims of credit and banking fraud are liable for no more than the first $50 of the loss. In many cases, the victim will not be required to pay any part of the loss.

To reduce your risk of identity theft:

Protect your personal information and do not carry your Social Security card with you

Keep your mail safe and store your personal information in a safe place

Order your credit report at least once a year to make sure no one is using your identity to open account

If you think your identity has been stolen, take the following steps:

Contact the three major credit bureaus. Contact the fraud departments of all of the three major credit departments (click here for contact information) to place a fraud alert on your credit file. The initial fraud alert is for 90 days. You can ask for an extended fraud alert if you file a police report.

Close accounts. Close the accounts that you know or believe have been tampered with or opened fraudulently.

File a police report. Get a copy of the report to submit to your creditors and others who require proof of the crime.

File your complaint with the Federal Trade Commission (FTC). The FTC maintains a database of identity theft cases, which is used by law enforcement agencies for investigations. Filing a complaint also helps us learn more about identity theft and the problems it causes victims.

As a security measure, Rapid Home Solutions requires all clients to enroll in a Credit Monitoring and Identity Theft Protection service.

Credit Scores

A credit score is a number grade attached to your credit report. This number tells a lender how likely you are to repay a loan or make credit payments on time. The actual number will fall somewhere between 350 and 850. A higher score means a better chance of having a credit or loan request approved.

It’s important for your credit report to be accurate because your credit score will change with credit report changes. For example, if you stop paying a loan, your credit score will go down. Likewise, if you begin paying all of your bills on time, your score will increase.

Credit scores take into consideration:

Use the following tips to begin to improve your credit:

Pay bills on time. The most important rule for maintaining good credit is to pay your bills on time. You can begin to improve your credit history immediately by making at least the minimum payments on time. Within a few months it will be obvious that you are managing your credit responsibilities better and a new, stronger credit report will result.

Use credit sparingly. A general rule of thumb is to spend no more than a third of your income on debt, including mortgages, credit cards, and consumer loans. Try to use credit cards only for purchases that have long-term value, such as furniture, medical care, or emergency repairs. DON’T depend on credit cards for everyday frills like dining out or entertainment.

Correct mistakes. Your credit is a reflection of the information in your credit report. If the report contains negative information, it will negatively impact your credit regardless of whether or not the information is accurate. Review your reports from all three credit bureaus for accuracy once a year, as well as several months before applying for a loan.

Pay off old debts. Make arrangements to pay off all existing debt. Establish a written payment plan and when an account is paid off, be sure to get a letter from the creditor that updates your credit bureau record.

Pay more than the minimum required. When you pay only the minimum due each month, you end up paying a lot of money in interest charges. For example, if you have a card with an 18.5 percent interest rate and you pay only the minimum balance due each month, it will take you more than 11 years to pay off a debt of $2,000. You will also pay interest charges of $1,934 – almost doubling the cost of your purchase.

Do not max out credit cards – use only 30 to 50 percent of available revolving credit.

Work with a reputable nonprofit credit counseling organization. Reputable nonprofit community-based credit counseling organizations can offer one-on-one assistance to help you improve your credit. Don’t confuse expensive credit-repair clinics with legitimate nonprofit credit counseling organizations. Be sure to watch out for organizations that charge big upfront fees, make unrealistic promises, and lack accreditation credentials. Contact Accion to confirm that any fees that you are being charged are reasonable.

Credit means you are using someone else’s money to pay for something. It also means that you are making a promise to repay the money. There are different types of credit and each has different payment options:

Installment Credit (for example, houses, car loans) – With installment credit, you sign a contract to repay a fixed amount of credit in equal payments over a period of time.

Revolving Credit (for example, bank credit cards, department store credit cards) – Revolving credit gives you the option of paying in full each month or making a minimum payment. As you pay the money back, it becomes available to borrow again.

Open 30-Day Accounts (for example, travel and entertainment cards) – These accounts are required to be repaid in full each month.

You may use credit that is secured or unsecured.

Secured Credit

means you have to provide something of value to guarantee that you will repay your debt. With secured debts, if you fall behind on payments, the lender can repossess the item of value that originally secured the debt. For example, a mortgage loan is a form of secured credit. If you do not repay the loan on time, the lender can take your home.

Unsecured Credit

means you did not have to surrender anything of value to guarantee that you will repay the loan. Unsecured credit allows you to purchase items on credit in exchange for your promise to pay the creditor back. Examples of unsecured credit include credit card debt, medical debt, and personal loans.

If you already know that your credit score is low or that your credit is in need of restoration, the best thing to do is for you to pull your own credit (that does not create an inquiry). You will want to begin working on improving it before you apply or reapply for a any loans. Luckily Rapid Home Solutions can help you restore your credit very quickly with easy. Register Here!

How can I pull my own credit report?

Note: This is the only authorized source for the free annual credit report that’s yours by law. The Fair Credit Reporting Act guarantees you access to your credit report for free from each of the three nationwide credit reporting companies – Experian, Equifax, and TransUnion – every 12 months. Although the information on the report is for free, you do have to purchase your score if you want to see it.

Working on your credit requires commitment and patience, and you should be aware that any improvement will be noticeable after about 45 days to several months. The good news is that, with dedication, you can definitely improve your credit.

*Actual RHS Client credit report screenshot after signing up with us.

A credit report is a record of how you have paid your credit card debt and other loans. Your credit report information shows whether or not you have paid your bills on time, the amount of money you owe to your creditors, and if you have loans that you have not paid back. Credit reports are compiled by three major credit reporting agencies – Equifax,Experian and TransUnion.

Review your personal credit report at least once a year and especially before making a large purchase, like a house. Review the four types of information found on your credit report:

2. Trade Lines – These are your credit accounts. Lenders report on each account you have established with them. They report the type of account (bank card, auto loan, mortgage, etc.), the date you opened the account, your credit limit or loan amount, the account balance, and your payment history.

3. Inquiries – The inquiries section contains a list of everyone who accessed your credit report in the last two years. The report you see lists both “voluntary” inquiries, spurred by your own requests for credit, and “involuntary” inquires, such as when lenders order your report so they can make you a pre-approved credit offer in the mail.

4. Public Record and Collection Items – Public record information includes bankruptcies, foreclosures, suits, wage attachments, liens, and judgments. Information is also included about overdue debt from collection agencies.

Each of the three credit reporting agencies will provide you with a free copy of your credit report, at your request, once every 12 months. Order your report from a central website for the three agencies, a toll-free telephone number, and a mailing address.

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